10th June 2024

Giving Back: Fintech Ushers A New Era Of Cashless Philanthropy

Navigating the UK’s evolving economic landscape has proved challenging for many charitable organisations relying on fundraising, as disposable income fell by 2.2% in the 2022/23 financial year.

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Giving Back: Fintech Ushers A New Era Of Cashless Philanthropy
Fintech Financial technology

By Jeremy Baber, CEO of Lanistar

Navigating the UK’s evolving economic landscape has proved challenging for many charitable organisations relying on fundraising, as disposable income fell by 2.2% in the 2022/23 financial year. Dependent on volunteers and governed by regulations such as the Chartered Institute of Fundraising’s guidance, the inefficiencies of traditional fundraising methods are becoming more widely recognised. To combat this, an increasing number of charitable organisations are shifting the focus of their business models to satisfy a more consumer-centric demand for fundraising and operations by implementing a cashless framework. 

Convoluted cash collections

Previously, charitable organisations have relied heavily on volunteers to collect cash donations, using bucket collection methods as a key source of supplementary income within broader fundraising campaigns. In recent years, however, charity dinners and galas have become financially inaccessible for many, presenting significant organisational challenges for budget allocation and financial forecasting. Combined with the regulatory complexities involved in cash collections, necessary paperwork and obtaining land permissions, this highlights just a few barriers charitable organisations face.

Onboarding volunteers can be a time-consuming task. It requires registration and issuing ID badges, which must detail their ID number and licence to collect. Depending on the type of fundraising activity, organisers may need to consult specific codes regarding working with children or volunteers. However, the practicalities involved in the physical collection of cash extend beyond volunteer coordination. For instance, desired locations for collections must undergo thorough checks beforehand, to avoid breaching legal rights. To collect cash on public or private land, charities must also obtain permission from the landowner or local authority, which often involves a lengthy approval process. 

Protocols must also be followed for containers used for donation collection. These range from checking existing container conditions, how they are opened and how the money is counted. Any fundraising materials distributed to the public must also be printed to include specific details such as the charity’s name, number, and contact details. Clear policies and processes regulating and protecting cash collection often convolute these efforts, creating barriers to optimised inflow.

The shift to consumer-centric philanthropy

As digital transactions surge in popularity and cash payments diminish, fintechs are welcoming a new era of cashless philanthropy. This shift enables individuals, regardless of geographic location, to donate via digital methods such as online donation platforms, QR codes and text-to-give schemes. As technological innovations drive an increasing number of people online, especially younger generations, donations are no longer restricted by time and place, facilitating a more predictable, sustainable source of income for charitable organisations. 

In response to this shift online, there has been an uptick in organisations implementing and operating on blockchain-run platforms. By storing data in interconnected blocks, these platforms provide an advanced database system that enables the transparent recording of transactions within a secure network. Not only does this improve financial visibility, but it also allows Non-Fungible Tokens (NFTs) to be purchased using crypto collectables. Implementing this technology introduces a new income stream, allowing donations to be made with cryptocurrency.

As emerging technology paves the way for varied income streams, charitable organisations must monitor the different inflows and outflows required to operate. Cloud-based accounting software, partnered with online banking, has proven successful in streamlining asset and cash flow management with real-time updates. Online banking allows for seamless payment of bills and payslips, whilst cloud-based accounting offers supreme accessibility to accounts, requiring only an internet connection. By streamlining these processes, charities can dedicate more time to building their core mission and fulfilling formalities more efficiently, rather than being overcome with excessive paperwork. 

A new era of philanthropy 

Volunteers, collectors and donors have provided consistent income for charity initiatives for centuries. Yet in recent years, fintech has successfully bolstered the influx of donations through digitisation. By reducing the reliance on physical cash donations, charitable organisations are now benefitting from the immediacy of online transactions across the globe. And with a reduced number of cash-collecting volunteers, comes reduced regulatory pressure and time spent onboarding.

As digital payments slowly replace in-person fundraising activities, advanced cloud-based software and online banking services streamline all aspects of financial management, including the recordings of transactions and allocation of budget. When combined with blockchain technologies, charitable organisations benefit from additional income streams through alternative currencies, optimising inflow within a secure and protected network.

Jeremy Baber

Categories: Articles, Digital Finance, Finance/Wealth Management

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